Epicor expands presence in retail sector

Epicor has just announced its intent to buy NSB Retail Systems PLC, a vendor of application systems for specialty retail stores. The deal is valued at about $287 million.

The deal will add to Epicor's previous acquisition in the retail space, in 2005, when it picked up CRS Retail Technology Group, Inc.

Commenting on the deal, Terry Tillman at SunTrust Robinson Humphrey writes:

Although CRS has some merchandising and CRM capabilities, the company has primarily focused on point-of-sale (POS) software, hardware and services, which we estimate has accounts for 80%-plus of the CRS business. While there are no specific CRS Retail financial metrics provided in 2007, we know the standalone CRS Retail business reported $69.7 million in total revenue in 2006 and our model assumes it likely grows in excess of the overall Epicor business in 2007. Our model assumes the business achieves 11.5% top-line growth in 2007. With the acquisition of NSB, the combined retail business approaches $175 million, according to our assumptions, and Epicor is now adding a strong set of complementary products in key strategic areas like merchandise systems and merchandise planning.

Epicor's expansion in specialty retailing is a good move. With the acquisition of NSB, Epicor will now have over 400 customers in the this important sector. Epicor's traditional market, focused on small and mid-size manufacturers is pretty crowded, with Tier I vendors Oracle and SAP encroaching from the high end, and its "partner" Microsoft coming at it from the side with its Dynamics line of systems.

Not that competition for the retail sector generally is any less fierce. Oracle and SAP are competing in that space as well, along with JDA Software and Lawson. But I suspect that the specialty retailer market in particular may be somewhat under-served at the mid-tier.

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